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The importance of performance management


Number oneDale Bartram explains why performance management should be number one on the business agenda.

Why implement formal performance management?

Arguably, all businesses operate performance management to a degree, so why take the time to put a formal process in place?

Creating and maintaining a comprehensive and uniform performance management programme enables HR to align line managers and employees with the goals of the business, so it is a high-profile way to demonstrate that HR is adding value to business performance.

Regular and consistent performance management can also be a powerful employee engagement tool. It creates an opportunity for managers and employees to make time to review performance, to share positive and negative feedback and to identify objectives and development plans.

“The competency framework will need to be wide-ranging to cover the entire business, but it may be necessary to make some competencies the same for all employees.”

Most importantly, robust performance management will provide the insight needed to shape a variety of other strategies and budgets. For example, identifying common development needs or requirements will feed directly into learning and development planning.

What are the key components to consider?

These will vary from organisation to organisation, but as a minimum, when implementing or refreshing a programme, the following issues need to be considered.

What is the context in which the programme is operating? If the business is performing well, then it is appropriate to position the programme as a tool to plan for future growth and succession planning. If the business is operating in tough conditions then it may be better to focus on achieving today’s goals.

What values and behaviours does the business want to encourage? To be engaging, these need to be a mixture of those that are grounded in the day-to-day realities of the business and those that are aspirational and support future plans.

What competencies does the business want to measure? The competency framework will need to be wide-ranging to cover the entire business, but it may be necessary to make some competencies the same for all employees. This will reinforce desired behaviour for both managers and employees. There will need to be enough levels against each competency to allow for growth and development – so employees can see they are making progress where appropriate.

What level of complexity is appropriate? This is not going to be the same across all teams and roles in the business so the programme will need to be scalable, in order to provide enough detail without being unmanageable.

“There are generally two choices for the HR team, either use an in-house system built to the business’s precise requirements or choose an off-the-shelf package that best fits.”

Will the programme be linked to remuneration plans? If so, is the proposed process for linking the two fair and workable? It is important to be confident that measures are objective and sensible; otherwise, you could run the risk of disengaging employees.

How to make the most of available software

For most organisations with more than 100 employees, some kind of software or workflow automation will be necessary to handle the processes and data involved in creating a performance management programme.

There are generally two choices for the HR team, either use an in-house system built to the business’s precise requirements or choose an off-the-shelf package that best fits. In making this choice, the HR team and the project sponsor need to consider budget, future scalability and the level of expertise in the organisation.

If choosing to work with an external supplier, it is important to put together a comprehensive requirements document, that potential partners can review and then demonstrate their expertise against. When compiling this, think about the future requirements as well as what’s needed today.

It is also important to think about usability and capture a realistic view of what is achievable across all areas of the business. Can the systems under review produce reports for HR and senior management? Are they easy to use outside of office locations and office hours? Are they easy to configure for particular requirements or will they force all managers and employees to work the same way?

In order to get the full benefit from the insight the programme will produce, it is also worth considering a system which can support consistency and clarity by cascading individual objectives within the business and systematically linking these to the overall business goals and one which can integrate with any existing HR or payroll tools. This will enable much deeper reporting and help quantify the return on investment through linking performance improvements with, for example, absence reduction, reduced churn and hiring costs or reduced overtime payments.

Planning for top performance

Having chosen how you are going to operate your programme from a systems’ point of view, you then need to think about your other key success factors. There is a degree of cynicism in the employee population regarding performance management. Indeed a recent Ceridian survey of 1,006 UK workers found that 39% regarded it as a ‘box ticking exercise’. So how can you make your programme a success and overcome any apathy?

Securing manager and employee buy-in
It is vital that HR collaborates with representatives from all areas of the business at all stages of the project, as far as possible. If you run an employee forum, this would be an ideal place to start with testing proposed frameworks and processes, and finding champions for the project.

Maintaining momentum
Whether this is a new programme or a refresh, it is important to plan a communications campaign that promotes activities across the whole year. Too often, HR teams focus on the initial objective-setting part of the process and then leave it up to managers to do the reviews throughout the year without guidance.

Delivering supporting initiatives
It is important that you are confident that you have the bandwidth and budget in place to capitalise on the insight gathered from the performance management process. Plan to review data captured regularly and dedicate HR time to developing initiatives in areas such as learning and development, talent management and even remuneration driven by the results.

Dale Bartram is senior product manager at Ceridian.

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